SK Hynix Soars 90% in One Year... Wall Street Says "It Goes Further"

High AI Potential and Surprise Q2 Earnings Expectations
Mixed Caution Due to High PBR Concerns

Wall Street analysts have been consecutively raising their price targets for SK Hynix shares. This is interpreted as reflecting the high potential of artificial intelligence (AI) and expectations for SK Hynix's surprise second-quarter earnings.

According to Bloomberg News on the 5th (local time), at least 19 analysts on Wall Street have raised their price targets for SK Hynix in the past month. Goldman Sachs adjusted SK Hynix's price target to 290,000 won on the 2nd, and Citigroup revised its price target to 350,000 won last week. These levels are approximately 25% and 50% higher than the closing price of 236,000 won on that day, respectively.

[Image source=Reuters Yonhap News]

Peter Lee, Global Head of Technology and Communications at Citigroup Global Markets Korea Securities, presented the highest price target (350,000 won) among the 19 analysts. He stated, "Demand for HBM may not yet be fully reflected," and added, "Since this is a market that did not exist in the past, we have never seen how far it can go."

No Jong-won, Chief Investment Officer at Infinity Global Asset Management in Seoul, emphasized, "The current stock valuation does not fully reflect the potential of high-bandwidth memory (HBM)," and added, "The market treats the value of HBM the same as existing memory chips, but its profitability is nearly double." According to data compiled by Bloomberg, SK Hynix's operating profit for the second quarter, scheduled to be announced on the 26th, is estimated to reach 5 trillion won, the highest in six years.

However, there are also cautious views. SK Hynix's stock price has continued a rally of over 90% in the past year, and its current price is 2.9 times its book value, marking the most expensive level since 2011. Yoon Joon-won, Seoul fund manager at DS Asset Management, explained, "We have entered an unknown territory in terms of valuation," and added, "I think it will exceed market expectations this year and next year, but the market remains uncertain."

Bloomberg also pointed out that SK Hynix's announcement of a 103 trillion won investment plan through 2028 at the end of last month has increased market concerns about potential oversupply of memory chips. In fact, SK Hynix's stock price fell about 4.7% on the 4th following news that Samsung Electronics would soon enter negotiations to supply HBM chips to Nvidia.